Ouch.

That’s what some officials in China’s tax bureau might be thinking these days as a new personal income tax law puts a damper on collections.

China’s income tax revenue shrank by 18.1% in the first two months of the year, according to data released Monday by the Ministry of Finance. The new law took effect last October, cutting the tax burden on low-income earners by expanding lower tax brackets and raising the monthly tax-free threshold from 3,500 yuan ($521) to 5,000 yuan.

The impact was felt immediately, with individual income tax revenue growth coming in at 7% last October, down sharply from 20.8% in September, according to the finance ministry. Tax chief Wang Jun announced earlier this month that nearly 200 billion yuan of taxes were cut in the first four months of the new law, adding that roughly 80 million people are no longer required to pay personal income taxes. 

But the news wasn’t all bad for tax collectors.

Revenue from the value added tax rose 11.3% in the first two months of the year, while consumption tax revenue rose 26.7% and business income tax was up 10%, according to the finance ministry’s latest data. And at a broader level, China’s national general public budget revenue grew 7% in the first two months. Still, all of those growth rates were down from a year earlier as China’s cooling economy takes a toll on tax collections and other government revenue sources.